Asset based lending incorporates the following four key areas and is aimed at generating cash flow within a business to enable expansion or simply to ensure the company has a healthy cash flow available:
Asset finance enables companies to obtain funding for the purchase of assets they need to run & grow their businesses successfully. Paying cash outright for capital assets can be a significant drain on your company’s working capital. With asset finance, you will ease your cash flow through regular payments over an agreed period of time.
This can be secured against a whole host of assets including cars, vans, lorries, coaches, light & heavy commercial vehicles, plant, machinery & office equipment to name but a few.
Factoring can offer many benefits to your business. Many companies use it to reduce the overheads of their own accounts department. Others use it to generate cash, which can be used to expand their business, increase distribution, or simply relieve short-term creditor pressure.
Factoring can provide the freedom you may have been looking for your invoices act as security, so there is no need to pledge any personal or business assets to increase cash flow. It will also allow you to keep your debtors under control, enabling you to react to your target market quicker & obtain new customers, pay employees or just rest easy knowing your cash flow is under control.
There is no need to keep increasing your borrowing as with overdrafts & bank loans as all finance is raised per invoice (up to 90%) so funding increases with company turnover. Minimum projected turnovers apply, individual providers differ.
How does it work? – An advance is made on your invoice value(s) up to 90%, the lender will then collect the debt, taking over your credit control & you will receive the balance of funds, less any charges, once the invoice has been paid.
Is exactly the same as Invoice factoring however you are in charge of credit control. An advance is made on your invoice value(s), then you manage the debt collection in order to repay the advance & any associated fees within an agreed timescale.
All fees are subject to individual circumstances & the number of debtors on the companies books.
• Finance leasing
• Hire/lease purchase
The acquisition of assets – particularly expensive capital equipment – is a major commitment for many businesses. How that acquisition is funded requires careful planning.
Rather than pay for the asset outright using cash, it can often make sense for businesses to look for ways of spreading the cost of acquiring an asset, to coincide with the timing of the revenue generated by the business.The most common sources of medium term finance for investment in capital assets are Hire Purchase and Leasing.
Leasing and hire purchase are financial facilities which allow a business to use an asset over a fixed period, in return for regular payments. The business customer chooses the equipment it requires and the finance company buys it on behalf of the business.